I’ve been thinking about Monday’s discussion regarding the implications of population age on inflation, can anyone please comment on and/or critique the following thoughts:
1. From what I understand from Mises and Rothbard, inflation is the expansion of the money supply and should be measured and thought of as such, not the rise in prices, which, as discussed, is impossible to measure because of the elastic tape measure problem mentioned by Saifedean. The age of any population does not have anything to do with how much currency the government is printing.
2. Taking point 1 into account, the discussion we should be having is: “The Impact of an ageing populace on productivity.” As a person gets older, he\she becomes more productive up until a certain age, then slowly becomes less productive until you die. On the other hand, the older a person is, the more time he/she has had to accumulate capital and thus become more productive. These two should “even each other out” to a certain extend. All other variables are relative to a particular group/country/population and cannot be theorised about because there are too many external factors to take into account(education, health, resources, etc).
I think that the accumulation of capital by these elders works in synergy with younger peoples’ labor. I don’t remember if the thought experiment assumed that a population aged and no young humans were “added”
I haven’t listened to this discussion, but I want to address your thoughts:
1) I think there’s opportunity to discuss how you define productivity. I think that it is a mistake to think that people get less productive as the age. There may be, by necessity, a shift in the area of their productivity, but that’s not the same as being less productive.
That said, I do think the reality is that many people do choose to be less productive as they age. Further, because of the common financial/economic paradigm, you typically see people try and pay off all their debt, and live out their years on whatever nest egg they’ve built up.
The government printing money is not the entire picture for inflation, not by a long shot. It’s important to remember that when commercial banks are making loans, they are essentially creating 90% of the money for that loan instantly.
So if you have a country that has a sizeable portion of the population heading into the years where they have chosen to be less productive, they will be paying off loans started in their 30s, 40s, 50s… and if there isn’t an equivalent amount of young people getting new loans, then the money supply is going to contract.